Missouri's Commerce Bancshares has announced plans to begin selling its new proprietary mutual fund family next month.
The Commerce Funds, which have been seeded with $250 million of assets from employee benefit trusts, will be sold through the banking company's trust department, its brokerage subsidiary, and as part of a 401 (k) service Commerce sells to corporate clients.
The Commerce Funds At a GlanceAdviser Commerce BancsharesHeadquarters St. LouisBank assets $7.9 billionPortfolios 7Administrator Goldman Sachsand distributor Asset ManagementCustodian and State Street Banktransfer agent and Trust
Sources: Company reports
The $7.9 billion-asset institution, which is based in Kansas City, is expecting particularly strong sales through the 401 (k) service.
This is because, currently, the only investments available in the bank's 401 (k) service are collective trust funds, which are believed to be less attractive to investors than mutual funds.
These trust funds will be replaced by the Commerce Funds -- a move Peter F. Mackie, executive vice president of the bank's investment management group, expects to boost sales of the 401 (k) service.
"Mutual funds are a more attractive product that can compete with the larger [retirement] plans out there," he said.
The 401 (k) plans allow company employees to save a portion of their income for retirement in a tax-deferred investment account.
One reason mutual funds are more attractive than the trust funds is that mutual funds' share prices are revised daily based on market performance and published in newspapers. Trust funds normally don't do this.
Glen Casey, a consultant at Cerulli Associates, Boston, said the focus on the retirement market was a sound strategy.
"Banks are recognizing that the traditional retail channels aren't as easily cracked as they once assumed," said Mr. Casey. "But the 401 (k) market is really screaming for mutual funds."
The Commerce Funds are made up of three equity and four bond portfolios, as well as an international portfolio. New York-based Goldman, Sachs & Co. will distribute and administer the funds, and it runs three money market funds that will be sold with the family.
Money manager Rowe Price Fleming International, London, will advise the bank on its international portfolio.